Wholesale on a HUD home

There is a HUD home for sale in a C area neighborhood. All brick, 4/2 1235 sq ft. for $41k; The ARV is $105k. The scenario is I want to wholesale this deal, but HUD is saying I have to close the property in my name, but I can sale it once I close.

How can this be done with an end buyer? I really don't want to use financing for this deal.

Usually there will be a clause that you cannot sell the property for 90-120 days after you purchase the property. You may want to get clarification on how long you must own it for before you can sell it.

I tried this years ago before I knew what wholesaling was. The title company wouldn't do it so I had to close using a HML and resell 1 week later. I didn't know enough to try a different title company and just assumed it wasn't allowed. Instead of making $12k on the deal I made $5k after all the points and fees!!! The HML made more on the deal than I did.

I know that some title companies will let you double or simultaneous close, you probably need to find one that will do that for you before getting any further along.

Usually there will be a clause that you cannot sell the property for 90-120 days after you purchase the property. You may want to get clarification on how long you must own it for before you can sell it.

Good point. The HUD waiver on this rule ends this year, if you don't sell to your end buyer before 1/1/15 it could be an issue. My understanding though is this regulation is only for FHA financing, meaning you could sell for cash to a flipper/rehabber, etc. Hopefully someone much smarter than me will be along shortly to fill in the gaps for us!

HUD deals are not assignable so you have to close in the name you made the offer in. Your own funds, hard money, or transactional funding will be necessary. For transactional funders it is typically required that you use the same title company for both your purchase and your sale to the end-buyer. Many HUD appointed closing agents will not want to handle both transactions, but you do want to tactfully ask them such as: "I am considering reselling this property, would you like to handle both my purchase and resale?" If they say yes, tell them that if you do you plan on selling on the same day, but would separately fund your purchase and the end-buyer will fund their purchase. Make sure they are clear you are not trying to use the end-buyers funds to close on your purchase or they will say no quickly. If they do not want to close both transactions I have funded "split escrows" where the second transaction closes at another attorney's office, since Georgia I an attorney state. This takes some coordination on your part as transactional funders will require your end-buyers funds and executed closing documents be in possession of the closing attorney before funding the purchase, but it is not really different than the coordination required for wholesale deals. I hope this helps.

If you made your offer to HUD as an investor there is no holding period for you, so you can resale it simultaneously. If you were selling to and end-buyer that is using a mortgage, either FHA or conventional, the mortgage lender will most always require you to hold the property for at least 90 days (referred to as "title Seasoning").

HUD deals are not assignable so you have to close in the name you made the offer in. Your own funds, hard money, or transactional funding will be necessary. For transactional funders it is typically required that you use the same title company for both your purchase and your sale to the end-buyer. Many HUD appointed closing agents will not want to handle both transactions, but you do want to tactfully ask them such as: "I am considering reselling this property, would you like to handle both my purchase and resale?" If they say yes, tell them that if you do you plan on selling on the same day, but would separately fund your purchase and the end-buyer will fund their purchase. Make sure they are clear you are not trying to use the end-buyers funds to close on your purchase or they will say no quickly. If they do not want to close both transactions I have funded "split escrows" where the second transaction closes at another attorney's office, since Georgia I an attorney state. This takes some coordination on your part as transactional funders will require your end-buyers funds and executed closing documents be in possession of the closing attorney before funding the purchase, but it is not really different than the coordination required for wholesale deals. I hope this helps.

THIS^^^ is what I wish I'd known years ago. The HUD appointed title agency wanted no parts of my "double close" and I didn't know enough to ask for/find a work around.

-There is no holding period for Investor purchases of HUD homes and they can be resold at any point . The waiver period mentioned that is set to expire on 12/31 only deals with resales where the purchaser is obtaining an FHA loan

- There are no assigned HUD closers anymore. With the HUD Buyer's Select Program you as the purchaser select the title company where the property will close. This is best done in advance especially if you are looking to do a double close. Keeping in mind that HUD purchaser's now pay any related closing cost's, it is advisable to obtain the closer's fee structure as well